Depending on your perspective, 2014 was The Year of the San Francisco Giants, Oscar winner 12 Years A Slave, Grammy winning song Stay With Me or The Year of the Horse. For life sciences, it was clearly The Return of the IPO and The Year of the Big Venture Capital Deal.

Aggregate capital funding in the life sciences sector, including biotech and medical devices, was the highest it has been since 2007. The number of deals did not set any records, but the investment flow of dollars to the sector and the increasing size of the deals were impressive.

What factors created that scenario? What drove the demand for venture capital and investors’ willingness to meet that demand? Was 2014 a blip or will the pendulum keep swinging in the same direction?

First, let’s quantify the phenomenon.

The life sciences industry was the second largest recipient of venture capital dollars in 2014, behind only high technology. The greater New York region and Boston were among the five U.S. regions receiving the most life sciences venture capital dollars. Early stage life science companies achieved record highs; later stage companies saw increases but not at record levels. Biotech companies led in all IPOs – 59 in 2014 – which was the best performance since 1994 and the second consecutive year in which biotech IPOs accounted for more than half of all of the venture-backed initial offerings.

Investors saw a number of criteria that caused them to open their checkbooks and back – in a major way – life sciences companies that showed promise.

A significant uptick in M&A and IPO activity provided liquidity and a clear and positive signal that exit/monetization events are increasingly available.

The domestic population continued to age. Along with that graying of America came not only increases in chronic and lifestyles diseases, but also a more intense focus on them – an older America will demand more products from the biotech and medical devices sub-sectors. Those sub-sectors, and the overall life sciences sector, will continue their drive to advances in treatments and technologies. Meanwhile, the government, insurance carriers and providers continued to focus on controlling and reducing costs while still improving outcomes, thereby requiring and motivating innovation.

The life sciences sector’s increased emphasis on value and outcomes, and a de-emphasis on volume driven by regulatory developments, also spurs innovation and appeals to venture capitalists.

There will be fits and starts, and the occasional bump in the road, but I look for the general trend line toward robust VC investment in life sciences to continue, and perhaps even grow more, in 2015. The demand for new technologies will continue to grow as a result of three phenomena:

A number of blockbuster drugs’ patents will expire in relatively short order;

Generics will continue to compete for market share; and

The government will continue and increase its emphasis on the high costs associated with health care and the results that health care – in all its various iterations – achieve.

Research and development is expensive by its very nature, and controlling those onerous costs requires enhanced efficiency and productivity. Big pharma will ramp up its collective efforts to seek out emerging-growth biotech companies as sources of technology and product pipeline. There will be an increased emphasis on corporate partnering, licensing and collaborative development.

All of the above tells me that, for the foreseeable future, the increased appetite among venture capitalists to invest in biotech, medical devices and life sciences companies in general will continue unabated. The details will shift, but the overall landscape will continue to see life sciences companies in the market for VC dollars, and venture capitalists meeting their needs. This trend undoubtedly will be spurred, at least in part, by the pundits’ predictions of another uptick in IPOs by life sciences companies, with a large majority projecting an increase in the numbers of biotech and healthcare IPOs.